Peter Hinssen is an author, serial entrepreneur, adviser and keynote speaker on the topics of radical innovation, leadership and the impact of all things digital on society and business. His first company e-COM was acquired by Alcatel-Lucent, his second, Streamcase, by Belgacom. His third venture, Porthus, was quoted on the stock exchange in 2006 and acquired by Descartes. Between start-ups, he worked as an Entrepreneur in Residence at McKinsey & Company, with a focus on digital and technology strategy. Hinssen’s current company Belgium-based nexxworks, connects corporates with what is happening in the world of innovation. Hinssen, the author of The Day After Tomorrow, The Network Always Wins, The New Normal and Business/IT Fusion, recently spoke to The Innovator about his fifth book, The Phoenix and The Unicorn, which will be published in March.
Q: Your new book is about the Phoenix and companies that — just like the mythical bird — are able to rise from the ashes, adapt to market changes and come out stronger than ever before. Which companies fall into that category?
PH: Unicorns have gotten a lot of attention and press because these new companies have grown so quickly and become so dominant but in my opinion the next decade will be the decade of the Phoenix because traditional companies are learning from unicorns, copying a few lines from their playbook, and building from there to reinvent themselves. The biggest inspiration for the book was Walmart. I’ve had the pleasure the last two years of following that company’s transformation and even went to Arkansas [where the company’s headquarters is located.] I have to admit I had low expectations but have been pretty much blown away their capacity to observe their unicorn opponent Amazon, put on a new coat of armor, revitalize themselves and come out stronger in the end. Walmart, like Microsoft or Disney, have proved capable of rearming themselves not just through their use of technology but by rethinking what they do in terms of organization, business model and culture and have come out stronger. I am fascinated by these Phoenixes. It takes stamina and guts to transform a traditional organization.
Q: What differentiates “Phoenix” organizations from the typical traditional corporate that struggles to keep up with innovation?
PH: I get invited a lot to talk to corporates and enjoy doing that very much, it has become a big part of my life but I would say that in the case of 90% to 95% of engagements I am there as the corporate entertainment. They love to be scared a little bit. I often feel that for the audience it is comparable to watching a zombie movie: I am there to rattle the audience and then they go back to the comfort of their activity. The irony is that some companies ask me to come back the year after and again the year after that but when I ask what has changed the honest answer is not that much. They understand the world is changing but the majority of companies don’t have the right mentality or leadership to address that. I am fascinated by the 10% that are willing to do something about it. I think Walmart is a great example. It took them a really long time to build a real sense of urgency. It was only at the moment when Amazon bought Whole Foods that a red alert was raised. They were very aware of Amazon but their attitude was ‘they are digital and will always be.’ It was when their number one competitor in online bought a direct competitor in the real world that the alarm bells went off. If you don’t have that sense of urgency for many companies talk about digital transformation and innovation is just so much blabla. The moment there is a clear sense of urgency there needs to be a clear version of what you want the company to do. A lot of companies struggle with how to embrace the new but still leverage the power of their legacy. Think of Walmart. They have almost 5000 physical stores in the U.S. alone so they have to leverage but they also needed a clear vision for offline to online. In their Super Bowl ad this year they used 1980s icons to highlight that you can order online and pick-up at physical stores. It is a great example of how Walmart has changed its thinking about how to service customers. In the 60s,70s, 80s and 90s Walmart was known for having the lowest price guarantees. It was all about sending a message to the customer that they were paying the cheapest price possible but now they understand that for a lot of people saving time is a lot more valuable. Another key element is getting everyone on board with a new direction from the top down. The current CEO, Doug McMillion, is the first to have worked outside the U.S. When he was running China he realized that the world was changing fast and the competitors might not just be Kroger or Amazon but Chinese companies like Alibaba who were going to eat them alive if they did not pay attention. Finally, Phoenixes like Walmart enable their innovators. Too many companies hire brilliant executives who are talented disruptors and bring them in with amazing promises but they get frustrated because they end up spending 99% of their energy fighting enemies inside the company.
Q: Do any European companies rate as Phoenixes?–
There is an enormous opportunity for Europe, even if it missed the entire digital sector in the last 10 years. When I visited European Commissioner Margrethe Vestager, who is famous for finding Google $5 billion fine, I asked ‘Aren’t you a little ashamed that we did not build our own Google?’ The response was ‘maybe but we are from the department that gives fines.’ What is very interesting now is the same politician is in charge of both competition and the digital agenda in Europe. I am very curious to see what will evolve from that. We are at a telling moment. The Financial Times ran an article last week that noted that Apple is now worth more than all 30 of the top listed German companies combined. The next wave of disruption will be even more fundamental. We did not build our own Facebook so we don’t have our own global platform for liking cat pictures but the next disruptions will be about energy and food and agriculture and healthcare. Europe has a potentially really big role to play if companies build differently and learn from the mistakes that were made in the last decade. We have the industries. We have the brains. We have the talent. Philips is putting all stakes on the future of healthcare and healthcare will be one of the interesting areas going forward so it might be one of the European Phoenixes. The car industry is in panic mode because it has missed out on the big trends so these companies are trying to reinvent themselves. The potential is there but so far I don’t see a lot of shining examples coming from Europe. If we don’t prepare for a different future we are going to be a lost Continent. In the last ten to fifteen years I spent a lot of time in Silicon Valley looking at startups and unicorns, but in the last three years I have also spent a lot more time in China and have been blown away what I have seen there in terms of strength and talent. Europe still thinks China is about copying but that ship has sailed. I have been teaching at MIT for two years and the best students are Chinese by far. In the past when these students got a degree from MIT they would head to Silicon Valley. Now they want to go to back to China because they believe that the scale, brain power and the money there will allow them to do things that are unparalleled. Creating Phoenixes is not just about a particular company or organization. We need to start thinking about regions or even continents in the same way. I love living here in Europe but we need to change our ways if we want to stay relevant. We need to think about how we are going to do this as a society.
Q: What is the best way to make innovation a reality in an organization?
PH: In the book I talk about the different types of innovation such as product or marketing but the reality is that things are changing so rapidly that it is necessary to take a multitude of approaches and fire on all cylinders. It sounds cliché so I hesitate to even say it but focus on customers is key. Most companies claim to be customer-centric but few are. I have been a customer of a Dutch bank for 37 years and it is amazing how little they actually know about me. What a difference with the neo banks. I am a customer of N26 and Revolut and in less than a year they have figured out how to do things for me that go way beyond the traditional bank. So, I would say companies need to put their money where their mouth is and hire a lot of people who understand how to deal with customers in the same way that the unicorns do. Platforms are becoming more and more a 21st century economic model and startups are much better at using them to piece together the perfect customer experience whereas big companies like to try and build everything themselves. Instilling a culture that encourages people to do things they have never done before is absolutely essential if you want to reinvent yourself. And leadership is key. We need to be thinking about how we are going to train the next generation of leaders. We need new skills, new attitudes and new tools and governance systems. If your company does not have a leader trained to run a 21st century organization it is going to be very difficult for your company to reinvent itself.
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